1. South Korean real estate: DWS
The South Korean real estate market is now the fifth largest in the Asia Pacific region for invested stock and transactional volume among international investors.
Korea keeps its fifth position in Asia Pacific in terms of size of Grade A office stock and invested real estate stock value, of which 20% are owned by REITs and funds, according to Deutsche Bank’s asset management arm, DWS.
‘Subdued demand held office vacancy rates at elevated levels in the CBD and Yoido, while Gangnam remained relatively tight. Average office gross rent in the Seoul CBD has grown stably in the last few years, though rent-free periods in the CBD recently expanded to four months per year,’ DWS research wrote in a report.
In the residential sector, rental houses have emerged a comparably affordable option for tenants.
Average vacancy rate of modern logistics assets in Greater Seoul remains low as the rental growth cycle continues, while a record amount of supply is expected to come consecutively in 2018 and 2019.
The average hotel occupancy rate in Seoul recovered to 75% in 2016 from 69% in 2015, but is expected to soften again.